The petro-yuan bombshell

The new 55-page “America First” National Security Strategy (NSS), drafted over the course of 2017, defines Russia and China as “revisionist” powers, “rivals”, and for all practical purposes strategic competitors of the United States.

The NSS stops short of defining Russia and China as enemies, allowing for an “attempt to build a great partnership with those and other countries”. Still, Beijing qualified it as “reckless” and “irrational.” The Kremlin noted its “imperialist character” and “disregard for a multipolar world”. Iran, predictably, is described by the NSS as “the world’s most significant state sponsor of terrorism.”

Russia, China and Iran happen to be the three key movers and shakers in the ongoing geopolitical and geoeconomic process of Eurasia integration.

The NSS can certainly be regarded as a response to what happened at the BRICS summit in Xiamen last September. Then, Russian President Vladimir Putin insisted on “the BRIC countries’ concerns over the unfairness of the global financial and economic architecture which does not give due regard to the growing weight of the emerging economies”, and stressed the need to “overcome the excessive domination of a limited number of reserve currencies”.

That was a clear reference to the US dollar, which accounts for nearly two thirds of total reserve currency around the world and remains the benchmark determining the price of energy and strategic raw materials.

And that brings us to the unnamed secret at the heart of the NSS; the Russia-China “threat” to the US dollar.

The CIPS/SWIFT face-off

The website of the China Foreign Exchange Trade System (CFETS) recently announced the establishment of a yuan-ruble payment system, hinting that similar systems regarding other currencies participating in the New Silk Roads, a.k.a. Belt and Road Initiative (BRI) will also be in place in the near future.

Crucially, this is not about reducing currency risk; after all Russia and China have increasingly traded bilaterally in their own currencies since the 2014 US-imposed sanctions on Russia. This is about the implementation of a huge, new alternative reserve currency zone, bypassing the US dollar.

The decision follows the establishment by Beijing, in October 2015, of the China International Payments System (CIPS). CIPS has a cooperation agreement with the private, Belgium-based SWIFT international bank clearing system, through which virtually every global transaction must transit.

What matters in this case is that Beijing – as well as Moscow – clearly read the writing on the wall when, in 2012, Washington applied pressure on SWIFT; blocked international clearing for every Iranian bank; and froze $100 billion in Iranian assets overseas as well as Tehran’s potential to export oil. In the event Washington might decide to slap sanctions on China, bank clearing though CIPS works as a de facto sanctions-evading mechanism.

Last March, Russia’s central bank opened its first office in Beijing. Moscow is launching its first $1 billion yuan-denominated government bond sale. Moscow has made it very clear it is committed to a long term strategy to stop using the US dollar as their primary currency in global trade, moving alongside Beijing towards what could be dubbed a post-Bretton Woods exchange system.

Gold is essential in this strategy. Russia, China, India, Brazil & South Africa are all either large producers or consumers of gold – or both. Following what has been extensively discussed in their summits since the early 2010s, the BRICS are bound to focus on trading physical gold.

Markets such as COMEX actually trade derivatives on gold, and are backed by an insignificant amount of physical gold. Major BRICS gold producers – especially the Russia-China partnership – plan to be able to exercise extra influence in setting up global gold prices.

The ultimate politically charged dossier

Intractable questions referring to the US dollar as top reserve currency have been discussed at the highest levels of JP Morgan for at least five years now. There cannot be a more politically charged dossier. The NSS duly sidestepped it.

The current state of play is still all about the petrodollar system; since last year what used to be a key, “secret” informal deal between the US and the House of Saud is firmly in the public domain.

Even warriors in the Hindu Kush may now be aware of how oil and virtually all commodities must be traded in US dollars, and how these petrodollars are recycled into US Treasuries. Through this mechanism Washington has accumulated an astonishing $20 trillion in debt – and counting.

Vast populations all across MENA (Middle East-Northern Africa) also learned what happened when Iraq’s Saddam Hussein decided to sell oil in euros, or when Muammar Gaddafi planned to issue a pan-African gold dinar.

But now it’s China who’s entering the fray, following on plans set up way back in 2012. And the name of the game is oil-futures trading priced in yuan, with the yuan fully convertible into gold on the Shanghai and Hong Kong foreign exchange markets.

The Shanghai Futures Exchange and its subsidiary, the Shanghai International Energy Exchange (INE) have already run four production environment tests for crude oil futures. Operations were supposed to start at the end of 2017; but even if they start sometime in early 2018 the fundamentals are clear; this triple win (oil/yuan/gold) completely bypasses the US dollar. The era of the petro-yuan is at hand.

Of course there are questions on how Beijing will technically manage to set up a rival mark to Brent and WTI, or whether China’s capital controls will influence it. Beijing has been quite discreet on the triple win; the petro-yuan was not even mentioned in National Development and Reform Commission documents following the 19th CCP Congress last October.

What’s certain is that the BRICS supported the petro-yuan move at their summit in Xiamen, as diplomats confirmed to Asia Times. Venezuela is also on board. It’s crucial to remember that Russia is number two and Venezuela is number seven among the world’s Top Ten oil producers. Considering the pull of China’s economy, they may soon be joined by other producers.

Yao Wei, chief China economist at Societe Generale in Paris, goes straight to the point, remarking how “this contract has the potential to greatly help China’s push for yuan internationalization.”

The hidden riches of “belt” and “road”

An extensive report by DBS in Singapore hits most of the right notes linking the internationalization of the yuan with the expansion of BRI.

In 2018, six major BRI projects will be on overdrive; the Jakarta-Bandung high-speed railway, the China-Laos railway, the Addis Ababa-Djibouti railway, the Hungary-Serbia railway, the Melaka Gateway project in Malaysia, and the upgrading of Gwadar port in Pakistan.

HSBC estimates that BRI as a whole will generate no less than an additional, game-changing $2.5 trillion worth of new trade a year.

It’s important to keep in mind that the “belt” in BRI should be seen as a series of corridors connecting Eastern China with oil/gas rich regions in Central Asia and the Middle East, while the “roads” soon to be plied by high-speed rail traverse regions filled with – what else – un-mined gold.

A key determinant of the future of the petro-yuan is what the House of Saud will do about it. Should Crown Prince – and inevitable future king – MBS opt to follow Russia’s lead, to dub it as a paradigm shift would be the understatement of the century.

Yuan-denominated gold contracts will be traded not only in Shanghai and Hong Kong but also in Dubai. Saudi Arabia is also considering to issue so-called Panda bonds, after the Emirate of Sharjah is set to take the lead in the Middle East for Chinese interbank bonds.

Of course the prelude to D-Day will be when the House of Saud officially announces it accepts yuan for at least part of its exports to China. A follower of the Austrian school of economics correctly asserts that for oil-producing nations, higher oil price in US dollars is not as important as market share; “They are increasingly able to choose in which currencies they want to trade.”

What’s clear is that the House of Saud simply cannot alienate China as one of its top customers; it’s Beijing who will dictate future terms. That may include extra pressure for Chinese participation in Aramco’s IPO. In parallel, Washington would see Riyadh embracing the petro-yuan as the ultimate red line.

An independent European report points to what may be the Chinese trump card; “an authorization to issue treasury bills in yuan by Saudi Arabia”; the creation of a Saudi investment fund; and the acquisition of a 5% share of Aramco.

Nations under US sanctions such as Russia, Iran and Venezuela will be among the first to embrace the petro-yuan. Smaller producers such as Angola and Nigeria are already selling oil/gas to China in yuan.

And if you don’t export oil but is part of BRI, such as Pakistan, the least you can do is replace the US dollar in bilateral trade, as Interior Minister Ahsan Iqbal is currently evaluating.

A key feature of the geoconomic heart of the world moving from the West to Asia is that by the start of the next decade the petro-yuan and trade bypassing the US dollar will be certified facts on the ground across Eurasia.

The NSS for its part promises to preserve “peace through strength”. As Washington currently deploys no less than 291,000 troops in 183 countries and has sent Special Ops to no less than 149 nations in 2017 alone, it’s hard to argue the US is at “peace” – especially when the NSS seeks to channel even more resources to the industrial-military complex.

“Revisionist” Russia-China have committed an unpardonable sin; they have concluded that pumping the US military budget by buying US bonds that allow the US Treasury to finance a multi-trillion dollar deficit without raising interest rates is an unsustainable proposition for the Global South. Their “threat” – under the framework of the BRICS as well as the SCO, which includes prospective members Iran and Turkey – is to increasingly settle bilateral and multilateral trade bypassing the US dollar.

It ain’t over till the fat (golden) lady sings. When the beginning of the end of the petrodollar system – established by Kissinger in tandem with the House of Saud way back in 1974 – becomes a fact on the ground, all eyes will be focused on the NSS counterpunch.

The Essential Saker III: Chronicling The Tragedy, Farce And Collapse of the Empire in the Era of Mr MAGA

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There is more to it than that. Both Russia and China are teasing the West when it comes to their gold holdings. Russia has stated that it has 1801 tonnes of gold reserves. The number is symbolic, as 1801 was the year when Alexander I took reign, and he was one of the greatest of Russian czars, who defeated Napoleon. The Russians are in effect saying we shall win again, this time with our gold (30.000 tonnes kept in the Kremlin, under Putin’s direct supervision).

China has stated it has 1842 tonnes of gold. The date, too, is symbolic. In 1842 the Qing Dynasty was forced to sign the Treaty of Nanking, ceding Hong Kong to Britain. China is in effect saying we shall not forget this humiliation, and we will exert revenge, through financial means ofcourse (China also has 30.000 tonnes of gold). Both Russia and China are buying up all the available gold on the worlds markets, after which they will introduce gold backed currencies. I wonder how Wall Street will respond.

Russia and China symbolic numbers are rather like the USA giving the Lease-Lend Act the number 1776 I suppose.

The point about the thermonuclear devices was that the response from Wall St will probably not be overtly military.

I think Wall St responses have already started, sanctions on Russia, moving to tear up trade agreements, denigration of both countries, threatening military postures, etc.

These will be followed by the USA threatening countries that do business with either Russia or China (whups, already started as well). Followed in turn by denial that the gold backed currencies will be accepted – you know, the sun never sets on the Wall St Empire, eh wot?! Followed by acceptance that the world is multi-polar once it’s become clear that the USA doesn’t have the political clout to enforce its’ fiscal will, a couple of small scale local military skirmishes where the US gets the proverbial arse kicking (already started as well – see Syria/Ukraine), collapse of the USD as the reserve currency, and the rioting of the US peasants during the hyperinflation period where all fiat currencies end up.

Much of the substance of the article is interesting, but it needs a more realistic headline. There is no “bombshell” in this development.

Oil trading became U.S. dollar centric when the main exporter was Saudi and the main importer was the U.S. Now that the U.S. is a net petro-exporter that condition no longer exists. Without the Soros/Clinton globalists intentionally trying to manipulate trade, the evolution towards more direct mechanisms is near inevitable.
___________

Having the Persian Gulf states and China trade directly in Yuan/RMB is almost certain to become a major problem for the Chinese government. The Saudis and/or Iranians will have huge balances of Yuan in hand and no good opportunity to turn it into another currency.

It is not a huge leap to predict that a significant portion of this “excess” currency will be spent in North Western China, Xinjiang province, to fund Mosques and Madrasahs. These will be the launching point to radicalize the local Muslim population within the China. It could even become the next front line for Sunni/Saudi versus Shia/Iran conflict.

Gold is a commodity, not a currency. Given that gold supply is managed by the countries with significant mining operations it is an extremely perilous choice for a non-mining countries to have circulating.

The currency risk is too high to place large quantities of Yuan denominated bonds, and the Persian Gulf has a very limited market for Chinese consumer goods. There will significant buys of Chinese military equipment, but by itself that will not balance the cycle.

So, a logical prediction on how the value cycle will be closed.
-2- Persian Gulf spends Yuan on military equipment, Mosques and Madrasahs

This is a proven popular, winning strategy for Persian Gulf governments. Their public has supported sending significant amounts of money to establish Mosques and Madrasahs in places such as Pakistan and Germany.

Bancor system is the best ever devised for settling international trade imbalances. All international trade is only barter. Bancor system is not money, but an accounting device that marks trade channels between trading nations. Whenever a trade imbalance occurs, there is signaling for nations to begin adjusting exchange rates.

Capital, international capital especially, wants to take a cut of every transaction, so finance violently objects to a low friction moral system, like the bancor. Eliminating unneeded parasitic third parties from transactions drives prices lower.

This idea of trading debt instruments to create money is actually faulty, in that it debts don’t directly correlate to goods and services. Exchange to gold in futures contracts limits gold to a narrow channel, keeping demand for physical gold down. Only those who are participating in oil futures, and further only those who want to escape their acquired Yuan purchasing power, will be active participants in Yuan purchase of physical gold.

Post Bretton Woods trading gold standard worked pretty well up until Nixon went off of Gold window. Hudson explains how deficit spending by U.S. on Indochina was main reason for gold draining from U.S. treasury. See his book, Super Imperialism. Deficit dollars were held in French central banks, and would then claim gold rather than goods.

So, now we are back full circle to bancor, which forces trading nations to keep their national unit within their legal borders, and allows trading nations to balance their trade. Trading nations cannot do sneaky things like deficit spend on war, or spend on finance paper. China is not without blame, as they recycle their dollars to buy TBills, hence they are large holders of U.S. debt. China engages in mercantilism. Bancor participants would be forced to trade goods for goods, realizing the ” trade is only barter axiom.”

Today, U.S. deficit spends, and those dollars recycle back to buy TBills, or enter into U.S. stock market. None of this is the actual buying of U.S. goods and services from main-street.

If Saudi emits a debt instrument (TBill equivalent) denominated in Yuans, the debt instrument will travel to a holder of excess Yuans who is willing to buy it. In case of China, they have four state banks and can put said Saudi Yuan Bill on their double entry ledgers, to then emit new Yuans. In other words, China state banks can monetize Saudis with Yuans.

Saudi’s then sell their oil priced in Yuans, and these oil Yuans can then vector to China to buy back Saudi/Yuan debt instrument. Only Saudi will probably leave their Yuan debts on China’s bank’s books, and hold a working stock of Yuans.

America’s fifth fleet in Bahrain guarantees Saudi Tanker trans-shipment. So, Saudi’s security is bound up in Bill Petrodollar economy. Saudi will be reluctant to change over completely to Yuans, however their flirting with Russian arms will be a partial break from 74 Kissinger Saudi Agreement.

Gold has been used for thousands of year by ever empire existing in the history of mankind as a medium of exchange. Just because 1974 brought the petro-dollar you can’t start claiming that gold is a commodity and not a medium of exchange.

I believe that was the lie that George Soros told the Australian Treasurer, Peter Costello when he conned Costello into dumping most of Australia’s gold reserve on the world market.

I also believe this was the start of George Soros’ attack on the Asian countries that were called the ‘Seven Asian Tigers’. Most of these countries ended up relying on the IMF to get them out of strife, except Malaysia under Dr Mahathir. At about this time Dr Mahathir also started talking about introducing the gold Dinar.

What was most interesting about the price of gold and silver was that from this time their prices slowly increased until Easter in 2009 when gold was at $1900 and silver was $50, and it was during Easter that the rug was pulled from under these prices, which simply demonstrates the control and manipulation of these prices.

Anonymous should also note that his argument is just a wee bit off centre. The Boers settled in Africa, and ended up with The Orange Free State when in the late 1800’s the largest deposit of gold was found in that state and the Bank of England just couldn’t help itself, it had to have that gold, and so they did after a couple of wars and the invention of ‘Concentration Camps’ to control the local white populations, where thousands died.

Now there has to be one last question to be asked. Has anyone ever wondered why gold has been so valued from the start of history? Why was it those early Gods that aged so slowly mined for gold, and what was its purpose? Not for value, or for coins or for jewellery. There has to be another use, a major use for gold that made it so important in those early days.

Given that gold supply is managed by the countries with significant mining operations it is an extremely perilous choice for a non-mining countries to have circulating
This is the reason behind the colonization of Africa and other resource rich countries by the west. Countries that don’t have gold and silver resources can offer their technologies and other resources to resource rich countries in exchange for gold.

Oil is already being traded for yuan by Venezuela, Iran and Russia.
OPEC is not a fool to trade oil in yuan which the west won’t accept as a medium of exchange neither is China a fool to think that OPEC will agree to trading oil for yuan.That is why China is offering yuan that can be convertible into gold. They have even refused to make their new gold backed yuan convertible to or from US dollars.
Now again, the Chinese are not fools to offer a gold backed yuan if countries didn’t have confidence in gold. The US will try its best to force its vassals to reject the gold backed yuan.

What your problem is-
1) I see that you have a hard time understanding that gold can be used for trade as you right off gold as just a ‘commodity’ that is why you reject gold as a medium of exchange and expect countries to reject it too despite you own country of India obsessed with buying gold because they understand that gold has an intrinsic value. Remember France demanded repatriation of it’s gold from US in the 1960s, Germany is still doing it to this date. Romania has demanded for many years that Russia return their gold and Venezuela demanded the return of it’s gold from the Bank of England.

2) Your concern about OPEC sitting upon pile of yuan that the western countries will not accept as a medium of exchange is unwarranted because of your thinking that they will not convert those yuan into gold.

3) You are too concerned with the OPEC muslims funding islamic institutions abroad and linking it with terrorism and shia/sunni conflict. If the Indian government fears this, then it should block religious funding from foreign countries.

More importantly important in situ gold resources exist on all continents. Nobody has a monopoly on gold production. However nobody can increase gold production by more than a few percent annually, something more in line with natural industrial growth as opposed to the artificial unsustaining growth of the debt-ridden financial system. Gold anyone?

Well 2 sides to this one. Yes they can convert it to gold but that gold probably can only be used between states that agree to it like Russia, China, Iran, etc. The gold itself never leaves Shanghi, Moscow or Tehran. It is like a distributed FED. So yes and no it is convertible.

Now what do you spend it on? You have all this Yuan in the bank and what does China have to sell? Aside from all the consumer stuff some major infrastructure goodies are (and will be available soon) from China. They have 5 or so different nuclear technologies under development such as LFTR. If any one of them hit it, and I think LFTR will, then you have an export of epic proportions. Think of China setting themselves up to be not only the FED of gold but the OPEC of electricity!

“Yes they can convert it to gold but that gold probably can only be used between states that agree to it like Russia, China, Iran, etc. The gold itself never leaves Shanghi, Moscow or Tehran. It is like a distributed FED. So yes and no it is convertible.”
So yes & no it is convertible? What on this blue/green earth does that mean? If China is setting up its currency (Yuan/Renminbi) to be gold backed, then clearly it will be trading in gold for its currency. Not only that, China will be trading in gold futures, & possibly – more than likely – other gold denominated financial instruments to make that gold trade efficient, & viable. As other commentators have stated, gold is not a ‘commodity,’ gold is a trade able currency, in any major city in the world you can trade in gold for hard cash at the current market rate per ounce immediately. You can also pawn it pretty easilly as well. Gold is so far the only medium of exchange in human history that has been treated as containing intrinsic value all over the world, & that is not about to change.

Oh yes, I forgot to add another point, as to what gulf oil producers would do with their gold backed yuan/renminbi accumulation, or for that matter gold or gold futures, well – put it in reserve to back their own currency. Isn’t that bloody obvious? Hence Pepe Escobar’s correct designation of this process as being highly significant, because effectively what we are looking at here is the return of a global gold standard, & presumably that is the objective of both China & Russia, in order to stabilize the global financial system. As for the issue of gold supply & production, well again, that’s what the financial instruments are therefore, & if carefully managed to prevent speculation, bubbles can be avoided. I mean if the US can crash its own banking system on the basis of having created an artificial market of credit insurance swaps at a ratio of 2,000:1 against actual mortgage capital (real loan finance), then China is more then well placed to create a viable gold backed currency. Bear in mind this system operated before under Bretton Woods pretty well & was derailed by US inflated military expenditure, in particular the Vietnam War, but the rot started earlier with the Korean War. As long as China & Russia watch their fiscal policy & expenditure – all will be well. This is a good move – & who is so arrogant to assume that both the governments of China & Russia – with first class statesmen & economists – somehow don’t know what they are doing. I would not be so presumptious.

Please re-read my above. I did not say that Petro Yuan trade is “inherently bad”. Indeed I implied that it was almost inevitable. The point I am trying to make is that there is not straight line between Petro Yuan and “shiny happy future”.

Questions to consider:

-A- Specifically, what “goods and services” will China be selling in the Persian Gulf countries? These need to be in quantity comparable to the value of oil trade.

Most Persian Gulf countries currently have youth unemployment issues, or will soon have them based on demographics. If your proposed answer for -A- is “consumer goods”:
-B- How will Persian Gulf governments survive when trade in consumer goods is perceived by their citizens as depriving Muslims of jobs and giving them the non-Muslim Han Chinese?

Persian Gulf governments spending money in Muslim China, such as Xinjiang, would be much more palatable to their constituents. However, that is the least developed part of China and it is difficult to to see what export “goods and services” they can produce.

Both ‘worlds’ will exist simultaneously: petro-yuan and petro-dollar.
the petro-dollar won’t disappear completely, but only its dominant usage

Saudis will have the choice to sell oil in both (many actually) currencies.
Saudis want Boeing airplanes, well then they gonna sell some oil in dollars.
Saudis want Chinese made consumer goods, well then they gonna sell some oil in yuan.
Saudis want some German machines, well then they gonna sell some oil in euros.

The transition won’t be abrupt, but gradual. And you have a wrong understanding of
the coming multi-polar world. It is not to completely discard anything US/West and replace
it with Russian/Chinese. No, the coming multi-polar world is to give equal weight & opportunity
to both East & West.

-A- Specifically, what “goods and services” will China be selling in the Persian Gulf countries? These need to be in quantity comparable to the value of oil trade.
You are oblivious of the Chinese goods flooding the OPEC states. Even Mecca, the holiest city to muslims has not been able to resist the incoming chinese goods. There are so many Chinese companies like Huawei in persian gulf.

Most Persian Gulf countries currently have youth unemployment issues, or will soon have them based on demographics.
The country that is facing/will face this problem first is Saudi Arabia. This is why Saudi Arabia has started removing foreign nationals (irrespective of them being muslims and non-muslims) even from low scale jobs like drivers and have started replacing them with saudi youths.

-B- How will Persian Gulf governments survive when trade in consumer goods is perceived by their citizens as depriving Muslims of jobs and giving them the non-Muslim Han Chinese?
Have you ever tried to google how many non-muslim Indians, Filipinos and other nationals are still working in the what you like to call ‘persian gulf’. I advice you to just do a basic internet search to get the number.

Persian Gulf governments spending money in Muslim China, such as Xinjiang, would be much more palatable to their constituents.
You are fixated by this one subject about ‘persian gulf’ muslims spending yuan in Xinjiang region of China. Leave it for the Chinese to worry. You probably can’t get you thinking past the ‘Xinjiang funding by ME muslims’ and think of ‘persian gulf’ buying stakes in Chinese and Russian companies. ‘persian gulf’ muslims are not so holy to not care about profits and think only of funding the Xinjiang region.

However, that is the least developed part of China
It is one of the regions in China where economic development is on a fast lane.

and it is difficult to to see what export “goods and services” they can produce.
The reason why Xinjiang is so important to China is because of it’s vast resources and mineral rich mountains. I think you can make out from this about ‘what export “goods and services” they can produce’.

and a side note – the relationship between Arabs and Chinese dates back to thousands of years due to the silk road. Chinese emperors encouraged arab and persian muslims to settle in China to facilitate the silk trade. They even built mosques for them. Not only ME muslims, but arab christians and jews also settled in China. These arab muslims, christians and jews lived in harmony with the Chinese until their western ‘brethren’ came to wage their wars on China to tear her apart and devour her resources.

Currency is freely traded/converted in markets. If I have USD and need Euros to buy say a lot full of Mercedes cars from Germany, then there’s a market for that. The market sets the price at the time. A particularly large transaction might move the market a bit.

The goal that China has been persuing for quite some time now is to make the Yuan or Remimbi or whatever to be such an internationally convertable currency.

So, if a country or corporation gets a lot of any type of currency, then they can easily convert it to what they need to buy what they want. So, if KSA has Yuan, they can convert it to USD to buy those over-priced warplanes.

For us ordinatry people, if you use a credit/debit card through your bank, all of this happens behind the scenes and invisibly to you, until you get your bill and find out how much that dinner in Paris cost you in USD from your USD denominated account.

If there are large flows of a currency in particular directions, you might see a note on the Financial News that ‘today the USD dropped $0.01 against the Yuan”. Over time, this will tend to balance the exchange rates between currencies to match their flows.

And actually, one of the things that I think candidate Trump used to talk about was a need to weaken the value of the USD to make manufacturing at home worth more and to make imports more expensive. Haven’t heard this so much from President Trump now that he works for Goldman-Sachs. But generally a weaker USD would help the USA regain its industrial base that Goldman-Sachs has sent overseas for their profit.

That solution is simple. Forbid foreign states to sponsor religion in your country. That should be obvious for all countries.I’m surprised China hasn’t criminalized that already. I would have years ago.

There are those who would argue that the propensity to embrace superstition is hardwired into humans , and that this acts as an effective population limiter. That is we are genetically programmed to create meaning where there may be none. An example might be those who believe in the Rapture.
I do not intend to offend anyone, particularly those inclined to religion, by referring to this ; we all do it, in different ways.

The Spirit in the Gene is a book which makes the case . There are some pertinent extracts from the book available by searching on-line.

This is a restatement of Dawkins’ God Delusion thesis, although I’m not sure Dawkins work rises to the level of a ‘thesis.’

More like, the Royal Society is still searching for ways to excuse Zionist criminality, as in, it’s not the oligarchs who are poisoning, sterilizing or outright murdering the people of the planet, on account of their greed and psychopathy — it is something inside of YOU — your DNA, so don’t blame us if we decide to kill off everyone of you to replace you with something less flawed.

There is a fatal flaw in your argument. There is no difference between the “we” in your argument, and the ” you”.
If ” we” believe that ” we” are God’s chosen people, and are therefore different, then clearly the ” we” are suffering from the same genetically induced delusion/ superstition as the ” you”.

If people believe in the Rapture they can leave me their boats and fishing tackle…but when I ask them for the title papers they seem to change their minds…

So much for belief.

Serious, my dog know who his god is, but I have to create mine. Otherwise there can be no meaning to life, we would have to see ourselves as animals, or slime…but then there are people like that, and we could name them, too. Their god is money and they worship death. They destroy children and call murder by sodomy with a knife “good”…

“Despite the astonishing behavioral flexibility that has steered this maladapted primate so adroitly through some 2.5 million hazardous years, the animal is still vulnerable in the way that all animals are vulnerable: through its adaptive specialisations. By endowing the human brain with its language facility, evolution has ensured that human genes will continue to bypass the cerebral cortex at will, disguising fact with ‘significance’ and turning imagination into perceived fact. This prodigious talent for spiritualising its perceptions seems certain to keep this sapient primate safely sequestered from reality and well within reach of the biosphere’s standard forms of population control.”

Having the Persian Gulf states and China trade directly in Yuan/RMB is almost certain to become a major problem for the Chinese government. The Saudis and/or Iranians will have huge balances of Yuan in hand and no good opportunity to turn it into another currency.

Propaganda. The Saudis will find some way to spend their Yuan stash: their foreign reserves are dwindling rapidly already, which is one reason they can’t afford to lose China as a major customer. The Saudis’ financial appetite will grow if they are serious about transitioning off oil; this will be extremely costly, which means they will have to spend their income almost right away. So an excessive accumulation of Yuans by the Saudis will not be a problem for China.

Iranians will also be spending their Yuans rapidly, as their country needs much development.

“Having the Persian Gulf states and China trade directly in Yuan/RMB is almost certain to become a major problem for the Chinese government. The Saudis and/or Iranians will have huge balances of Yuan in hand and no good opportunity to turn it into another currency.”

On almost every thread, every article, every forum we see more and more of the propaganda skillfully placed against Iran, for war, against Hezbollah, for war, against political solution in Syria, for war, etc. etc.

Nice fear mongering here. This is second thread you are doing this.
Chinese Muslim population is less than 25 million out of 1.3 billion. I can tell Chinese is really afraid Arabs building a few Mosques.
Well you need to count Iran and friends out of your equation as we had more then 2000 years friendship, the last thing Iran want to do is comprise Chinese security where it seek shelters when lost in war some 1300 years ago. More over, Iranian buying a lot more than Military equipment from China.

I’d have to check, but I believe the USA remains a large net importer of oil.

Some quickie non-Google web search research found …

an EIA (US Energy Information Administration) report on the 2016 numbers. 2017 numbers are of course not available yet. In 2016, the USA imported 10.1 million- barrels per day. The USA exported 5.2 MMb/d of oil in 2016. And these numbers include “natural gas plant liquids”, which sounds like the LNG the USA wants to export to Poland and Europe, so its not purely oil, and since the USA has natural gas and would not likely import this, that should tilt the numbers more towards ‘balance’. 34% of the gross imports come from OPEC, while the leading country is Canada (38%). https://www.eia.gov/tools/faqs/faq.php?id=727&t=6

On a different page of the EIA website, I found this statement.

“U.S. reliance on petroleum imports has declined in recent years

U.S. petroleum imports peaked in 2005 and generally declined up until 2015. This trend was the result of many factors, including a decline in consumption, increased use of domestic biofuels (ethanol in gasoline and biodiesel in diesel fuel), and increased domestic production of crude oil and hydrocarbon gas liquids. The economic downturn following the financial crisis of 2008, improvements in vehicle fuel economy, and changes in consumer behavior contributed to the decline in U.S. petroleum consumption. Imports increased in 2015 and 2016 along with consumption.

The net imports (imports minus exports) of petroleum relative to petroleum consumption is one measure of our reliance on imports to help meet petroleum demand. Net imports of petroleum averaged 4.9 MMb/d, the equivalent of 25% of total U.S. petroleum consumption in 2016, up slightly from 24% in 2015, which was the lowest level since 1970.”https://www.eia.gov/energyexplained/index.cfm?page=oil_imports
—————
So, in summary this has been changing. But, while the USA dependence on imported petroleum has been decreasing, it is still significant. For instance, if 25% of the supply were disrupted by a cut-off of imports, that would have a huge effect on the USA.

Remember also that the type of oil does matter. I’m not an expert or a chemist, but I believe I’ve heard that the newer sources of US oil, from tar sands and/or fracking operations, is a much ‘heavier’ type of oil. Which would make a difference to refinery operations trying to produce a product like gasoline.

The petro-dollar was initiated by Nixon after he reneged on a Bretton-Woods agreement, I think with Great Britain in about 1972.

However one on more important aspects of this era, was the OPEC meeting that was gatecrashed by ‘Carlos-The Jackal’ who killed a couple of OPEC ministers who refused to accept his conditions.

Again about this time the rumours that Fort Knox no longer contained the American Gold started up and then much later the IMF stated that it held the largest amount of gold, which had to suggest that the American Gold’s reserve had been transferred to the various banks that formed the IMF

All of the original monetary slips of paper which were supposedly backed by gold changed in about 1932 when these slips of paper became ‘legal tender’. The fact that America’s printing presses continue to print excessive amounts does mean they have less and less value, but for the normal person, it is not the actual monetary value, but rather the ability to settle small debts within the society which is the true value.

One of the stories I read as a young man was set during the depression when the banks were continually withdrawing money from circulation. One of the smaller European countries had a counterfeiter whose notes were as good as the real thing. This counterfeiter continued to print money and thus defeated the banks ability to deplete the country’s monetary supply. He became a National Hero for this effort to defeat the banks.

Gold based or petrol based, these banks have never been our friends but simply mean and nasty businesses syphoning off our hard earned wealth.

The second Syrian War is in process. The CENTCOM-Israeli intransigence to leave Syria and its people alone is manifesting into a showdown.

Ukraine can never cease to be used to demonstrate the danger of Russia to EU/NATO. This is big weapons budgets and forward basing along the whole of the Western and Southern Districts of RF. This won’t end well or diplomatically.

The long game is gold and the petro-yuan.
Meanwhile, China could use special forces and alter the Syrian problem. The great weakness of China is it refuses to be a global military force for good. Even the enticement of 5000 Uyghurs in Syria fighting with ISIS did not work to bring a single rifle to help kill these terrorists.

They ran from Iraq, Libya, and Syria though their investments were tens of billions ruined by ISIS and AQ.

Now that there are reportedly 10,000 ISIS in Afghanistan, we shall see how China reacts militarily. Wanting only to be the banker of the multi-polar world is a self-deluding dream. The US will have little problem using terrorists to disrupt most of the BRI.

There’s a time for military. China does not see things that way.
The NSS is a military challenge only Russia is prepared to cope with.
Iran sent weak militias to Syria in the last year. They are taking enormous losses of late. China has sent nothing.

We’ll see how this clash of Hegemon and the multi-polars erupts.
It definitely won’t just be economic. That’s a losing game for the US. Thus, the NSS foretells the US willingness to start bigger wars far from its shores impacting its rivals and their interests.

Trump’s NSS is merely a rehash of Global Vision 2010 and Global Vision 2020, which form the basis for the Outlaw US Empire’s primary policy of attaining Full Spectrum Dominance, the policy adopted to fulfill GHW Bush’s New World Order dictat from 1991. The basic doctrinal goal of Full Spectrum Dominance ought to be very clear–enslavement of the world’s people and vassalage of all nations to the Outlaw US Empire–which declares war on the UN Charter and the US Constitution besides every nation. And that was done in 1991. It’s taken too long for the formation of a global resistance, but that finally came about formally with Russia’s 2015 intervention in Syria.

So, although few noticed at the time, World War 3 was declared by GHW Bush as he also claimed the formation of the New World Order; and in both hot and hybrid forms, that war continues to escalate now that visible resistance emerged.

True,that is a big problem for China. Unlike Russians and the US,their military hasn’t fought since 1979 (and that was a short affair). Their officer class has no direct combat experience to learn lessons from.Training is good no doubt. But actual combat experience is invaluable in learning real life warfare lessons.Not just in direct fighting,but in supply of needed weapons.And in the stress of planing and fighting in combat.The same is true for their air wing. Look at the successful Russian air forces in Syria. They got a lot of direct knowledge from rotating pilots and equipment in that battle theater.

We don’t really know what China has supplied to Syria. We’ve been told that Chinese trainers are on the ground, and that China has supplied ‘equipment’. We know that several months ago a Chinese flotilla passed by that region; did they drop anything off? If they did, how would we know?

Having spent a considerable amount of time in China and with many friends in the Chinese military I can tell you they are well trained, and in general dedicated to serve. I can also tell you they share that insular Chinese mindset so they share nothing about deployments even after killing a bottle or two of Baijiu.

In terms of their equipment I actually own an export version of the Type 95 bullpup chambered in 5.56 NATO (Type 97) and it is a well designed, robust rifle with a reasonable degree of accuracy well suited to general use. The export version is not built to the same standards as the actual issue rifle, but I can tell you I much prefer it to the M16 variants. In fact, a couple of years ago the International Snipers Competition was won by a Chinese team using native Chinese gear – keep that in mind. I also happen to own the export version of the Chinese SKS and a Russian surplus one and quite frankly they are pretty competitive with each other in terms of accuracy and both are ‘bullet proof’ (bad puns not intended).

The general mindset that China has adhered to over the centuries is that trade income trumps war expenses. They will avoid war wherever possible, but once the battle is joined it is pursued to a ruthless and swift conclusion. The Xiong Nu are the ancient enemies of China – they no longer exist as a people. The Rouran made the same mistake as the Xiong Nu – they too no longer exist.

As another hint into the Chinese mindset I will reveal that my wife is descended from Liu Bei who was related to Liu Bang – founder of the Han Dynasty. We were watching the Three Kingdoms one night, and Kong Ming (Zhuge Liang) was trapped in a small town without food. I asked my wife what the problem was – take it all from the peasants and let them starve to death – who cared – they were peasants, that’s what a western army would do. She was horrified “No! Stupid! How do you rule? When you win? Peasants never forget!” The point being that to rule the peasants, don’t destroy their infrastructure. The long term income from the taxes and reduced chance of revolt make for higher and more stable income for a longer period time.

China plays the long game, they can literally wait for a century or two.

Agreed. I was on an FTX once and another officer and I started discussing general military doctrine. We ended up talking about Master Sun’s masterpiece ‘The Art of War’ and it’s application to both civilian management and military strategy. I asked him if he’d ever read the Tao Te Ching and his answer was ‘no, I haven’t, what is it? I had to explain to him that it was the basis for the ‘Art of War’, and therefore he had never really read ‘the Art of War’.

I find it quite amusing that so many western people read Master Sun and think they understand him. If Cao Cao, Sima Yi and Zhuge Kiang all read the same passage, each would have a different interpretation of Master Sun and they were all Daoist masters!

The entire premise of the Dao is the concept of duality in all aspects of life, and the unknowable flow of the energy of the Universe.

The long game is why China was invaded and conquered repeatedly in history.

Russia went to Syria and killed 58,000 Wahhabis. 5000 of them were Russian.
The dead aren’t returning to do any damage to Mother Russia.

China hasn’t killed one Uyghur in Syria. The ISIS Uyghrs will be in Afghanistan, Xinjiang and Sichuan and Yunnan eventually.

The US Hegemon really appreciates Chinese reluctance to bleed.
The fact that some of the Chinese rifles work great in marksmanship competition is laughable.
The Chinese are running a big bluff that will be called by the Hegemon, by proxies and by Japan. Even Taiwan might risk it, especially if McMasters whispers in their ear that Trump will send Marines to help them.

I normally agree with your point of view, but I must correct several fallacies. First of all, China has been fully conquered only once from outside – that was the Mongols and it took them over 20 years to overcome the Southern Song dynasty. To do that, they ended up having to import new siege weapons from the Middle East that outranged the Chinese ones. After a couple of centuries of Mongol rule, the Chinese revolted and all of Mongolia became China. The Japanese never fully controlled all of China, nor did the western powers, and once proper leadership resurfaced in China they haven’t had any control since.

As far as the rifles – you didn’t get the point – I suggest you reread what I said. These are robust designs that quite frankly I see doing well in combat environments – not like the M16 variants. The military equipment they have is quite decent and comparable to western items. I have family members that served (and serve) in the Chinese military.

Neither you nor I know anything about China did, or didn’t do in Syria, that is open to supposition. China only publishes their actions when strategically advantageous to their agenda. Simply making a statement does not make it true, which is why I hedged my comments about their contribution to Syria.

The Chinese ‘reluctance to bleed’ as you put it is actually not what you believe it to be – you need to think in Daoist concepts. If a tree is falling, do I need to take an axe to it? Only insofar as it falls in a direction I don’t like, and only so much as to ensure the direction is to my liking. I’ll let you figure out the meaning.

China had no functioning government during the Japanese occupation. Basically, the China of opium wars and then Japanese invasion was not a functioning nation.

1949 began to change that.

The 150 years of humiliation as the Chinese presently refer to the period of “not being controlled” as you put it, was a period all the world recognizes that China had no control of its borders or destiny. The New China birth in ’49 changed that.

I get the Taoist stuff. It’s meaningless when the Takfiris are cutting off your head. I never picked fights. But I sure as hell fought and finished them if someone wanted some. If you came to kill me, I’ll kill you. That’s Wahhaism. They intend to kill everyone. They must be killed. Lesson one: Chechnya. Lesson two: Syria. You kill them. Even Duterte knew that and killed them.

Abe is rearming a massive military with a Japanese society on a death spiral and an economy built on the meltdown of Fukishima as symbol of the strength of Japan’s technology.

If China can green tea and smile their way ahead, we’ll see.

Better to show some spine along with the platitudes.

Resolute is a word they use all the time and never demonstrate anywhere outside the nine-dash line and the inner islands. Of course, it works there. For now.

Look at North Korea. Insulting Beijing for six years. If Deng Xiaoping or Jiang Zemin or even Hu Jintao were rebuffed and China so endangered this way, young fat Kim would be long gone.

What do you have Special Forces for? Training is useless if your military is never tested and then you find you have a huge war to deal with.

The US is mounting that war like they did in the Middle East. They did a dry run in Philippines. It will be coming in several directions.
So far, all Beijing has done is hire Eric Prince for security in Sichuan and Yunnan. No guns! Just advice from his guys.

This is a global war on terror.
The Chinese are reluctant to even call into action the organization they set up to handle this very menace–SCO. Russia leads it and is invigorating it.

To never fire a shot is ludicrous. They have learned nothing.

Syria is self-defense. It is not bellicosity. Russia showed what it was. You kill your enemies far from home. And they did it on the cheap. A few billion dollars. Basically, a little above what the normal cost of exercises and training and maintenance would be doing nothing. Instead, they killed 58,000 crazy liver-eaters and destroyed their economic base and changed the ME.

I spent Christmas Eve and Christmas day with Chinese friends. I love these people. I just disagree with the national policy.

In my view, the eastern countries like China, Korea and Japan never got the essence of Abrahamic religions. Maybe it’s because of their Buddhism, Confucianism, Shintoism or Taoism which made them meek. They never understood that the mutating cancer versions of abrahamic religions like zionist judaism, evangelical christianity and takfiri Islam will never stop bleeding china until she is plundered and devoured completely. Their all encompassing view of truth being reachable through all religions makes them unable to comprehend that these mutant abrahamic versions will declare them pagans, idolators, polytheists and infidels and wage everlasting war on them.

Looking at the long game, the Japanese nation is failing in their economy, their birthrate is falling, they just unleashed a massive poisoning of their land and people, and their vassal populace in Okinawa is chafing under the rule of foreign overlords. The USA is massively indebted, hasn’t been able to tame Afghanistan, had their butts handed to them in Iraq and Syria, and the USD is under threat as a reserve currency. Saudi Arabia is dealing with Russia, and China is Saudi Arabia’s second largest customer. China is managing the fall of 2 countries, and slowly winning away those countries supporting them through economic means. They don’t need to expend energy by fighting when the inertia of the failing west is moving in their favour. As master Sun teaches ‘you only need the second largest army’.

The Chinese are very aware of where the ‘World Uygher Congress’ is located and who pays their wages, they are very aware of where the ‘Falun Gung’ headquarters are located – and who funded them. What many people don’t consider is the economic burden of supporting these fringe groups that bring very little strategic value to an equation, and in proportion to the costs of funding them do very little collateral damage. Do you think for a moment that Saudi Arabia will turn their takfiri’s on China if China will shortly be their largest customer – and deals in convertible gold and paper currency? Russia did not have that option as an economic competitor to Saudi Arabia – they had to kick arse and show they meant it.

The Chinese armed forces have been participating in UN operations, performed difficult evacuations of civilians, trained military in Syria, confronted the US air force in the ADZ’s, tamped down unrest in Xinjiang, are performing anti-piracy patrols off Somali, and at one time sneaked in close to the coast of Washington and fired off a missile. Another time a Chinese sub surfaced right in the middle of a US carrier group that never had any indication that the sub was there. You never fight an enemy on the battlefield of their choosing, and China is choosing their responses to ensure that does not happen.

You can complain about North Korea’s treatment of China but honestly, do you really think that NK developed those sudden leaps in rocket technology by themselves? China does not want THAAD in SK, but they even less than that want the USA on their border! So while it might have been the Ukraine that assisted NK in developing the technology, it could equally likely be China. Have you noticed that China is already circumventing the ‘sanctions’ against NK by direct petroleum transfer at sea?

Lastly, the Kuomintang (Chinese Republic) was the functional government of China under the control of Chiang Kai-Shek during World War II. The Qing Dynasty is regarded as falling in 1912, and the rise of the Republic dates from 1912 but actually started before then so there was overlap. It was the weakness of the Qing Dynasty under Cixi that led to the loss of the First Sino-Japanese War and set the stage for the rise of the Republic, originally under Sun Yat-sen. The Republic was faced with a massive modernization effort, and a depleted treasury. Chiang Kai-Shek did manage to control most of the warlords but the modernization efforts – heroic as they were – were insufficient to ward off the Japanese Empire after they were hit with a US embargo. Much of the industrialization that Mao Zhedong was able to “capitalize” on (joke intended) was due to the Republics efforts.

It’s great you spent Christmas with a Chinese friend but I live with them 24 hours a day, 365 days a year (366 in a leap year) in both China and my own country. The reason my household works so well is a profound knowledge and abiding respect for the culture and historical development of my wife’s people.

During the six years of President Xi there has been the worst relationships diplomatically,militarily between Beijing and Pyongyang. During that time, every reliable contact, including most of the Communist Party to Communist Party liaisons were eliminated by Kim.

To think the public insults by Kim of the Chinese government, of President Xi, of diplomats and of the Chinese people got him six years of speeded up assistance in ICBM technologies and nuclear advancement of warheads and miniaturization is fanciful.
Even the loons of Langley don’t suggest such nonsense.

Oh dear – now I’m worse than a Langley loon? I think that comment was over the top and quite frankly more than a bit insulting.

You do realize that allies pretending to be enemies to gain insight and influence over their real enemy is an ancient Asian tradition – don’t you? This was a common ploy during the three kingdoms and warring states periods. I’ve watched this at play in Chinese business, just as I’ve also watched Asian business enemies work together to cement a deal that enriched them both, then resume fighting for market share once the deal was done. The fact that Chinese oil tankers were immediately caught breaking the embargo suggests the possibility of this being a ploy, as does the fact that China just returned a defecting nuclear scientist back to North Korea. Chinese politics are notable for wheels within wheels – within wheels.

My discourse with you on this subject is done, regardless of whether you respond. Your comment that visible liaisons were severed by Kim is accurate on the surface but really means nothing. Neither of us have any idea of the subsurface (read hidden) connections and I quite frankly have no interest in exchanging insults.

The most psychologically healthy way to accept idiots with or without nuclear weapons who have no kids is to tell myself that whatever happens to myself is what I willed to happen to myself.
Equanimity is a virtue.

I’m optimistic that Russia and China can contain and flip Japan and India into allies.
India opposed the UN resolution against Russia on human rights in Crimea.

Interesting trends show Russia emerging with agriculture (wheat) and minerals as main economic rival to traditional Australian farm and quarry based economy. US ‘training’ base in Darwin to ensure Chinese access to Indian Ocean is ‘managed’ … and the local energy (gas) exports to China are controlled in case of conflicts. It still is a penal colony in many ways and oft confused in the muddled American mind with Austria (ref: Putin).

Basically run by the usual suspects and huge profits funding occupation of Palestine — e.g., see “Mining magnate Joseph Gutnick, one of Australia’s most senior Chabad rabbis, …” for a typical case puerile econo-theocratic rabies. https://www.haaretz.com/jewish/news/.premium-1.544936

“Russia went to Syria and killed 58,000 Wahhabis. 5000 of them were Russian.
The dead aren’t returning to do any damage to Mother Russia”. Oh yeah? What about the grieving relatives of the 5,000 dead Russian Muslims? We are talking about at least 20,000 or more grieving relatives. And this is not including their friends. Will they not seek revenge in due time? That is one of the reason why Putin should not go and bomb in Syria. The US seems smarter. They armed and sent only their jihadis in. The Chinese did not kill any of their own Uighurs in Syria. So no one in Xinjiang is seeking revenge on their behalf.

There is nothing the US can do short of World War Three, and I would not be surprised if both Wall Street and the Pentagon are analyzing that possibility, namely initiating a Third World War expecting minimal loses. I have even read articles by analysts who claim that the Pentagon, ostensibly, has come to the conclusion that a new world war is winnable with minimal loses. I sincerely hope those articles are incorrect.

When Brzezinski published that masterpiece of stupidity called “The Grand Chess Board”, he obviously was not aware of the consequences to come. He openly stated that the US will not tolerate the rise of any power which would challenge Americas globalist interests. This ofcourse was a clear reference to Russia and China. Since both read the book, both decided on an economic partnership, whose potential Brzezinski was incapable of grasping, proving that he was overrated as an intellectual.

Russia and China created the Shanghai Cooperation Organization, the BRICS and Russia created the Eurasian Economic Union, of whom China is not a direct member, but is certainly very much part of it. Both Russia and China accumulated large supplies of gold which, according to one analysts, amounts to some 60.000 tonnes. Both are preparing to introduce gold backed rubles and yuans, while China has given notice of introducing the petro-yuan.

And the US ? According to some American university professors, the total US foreign and domestic debt in December of 2014 was 222 trillion dollars, while the dollar is printed in excess of 120 billion a year backed by nothing, if not 1 trillion a year backed by nothing, as stated by one analyst. Such a situation, ofcourse, cannot last for ever without drastic financial consequences.

The US, naturally, resorts to brute force. Outside America it has 700 combat bases and 300 supply bases, many of them encircling Russia and China. In February of 2014 NATO and the EU instigate that coup d’etat against Yanukovich in Kiev, hoping to drag Ukraine into the EU and NATO. The chief aim is for NATO to position its missiles right next to Russian borders, and thus give it an advantage in a nuclear confrontation. Russia would be open to blackmail and demands of surrender.

This year we see Trump send the US Navy to the North Korean coast, obviously without too much planning. The US was hoping either for regime change, or for North Korea to back down. It did not happen. North Korea is not the issue, but the fact that it has borders with both China and Russia, which the Pentagon wants to control for the sake of placing missiles and giving it a nuclear advantage over both China and Russia and demands for the surrender of both.

Threats are being made against Iran, where an excuse is being invented for a possible military confrontation. The aim is to prevent Iran joining the Eurasian Economic Union, whose presence would strengthen it.

And Europe ? Its confidence in the US is vanishing. The US has instigated sanctions against Russia, yet Gerhard Schroeder, the former Chancellor of Germany, becomes Chairman of the Board of Directors of Rosneft, the Russian energy giant.

As I have written before, the US has for the first time found itself in a situation it did not anticipate, not knowing what it really has to do. If it goes to war, I doubt if it really knows which country to attack first. The year 2018 is going to be very interesting indeed. The US now has a choice of an open military confrontation or else accepting political and economic reality as it stands. We shall see what choice it makes.

Good overview, BF. It is interesting that the external stalemate coincides with the internal Deep State rift going on right now. By some accounts, that would seem to be coming to a head soon, or at least to a point of partial success on one side.

If the Trump side actually begins making significant arrests, the bring down will occupy the US for some time. But even this would not change the 3 aircraft carriers hanging out near NK nor the fact that Israel is under increasing danger due to increasing unity of purpose by its neighbors. Quite a full plate.

I make no claim of expertise, but it seems obvious to me that Erdogan is a game changer in his new tyrant/sultan-wanna-be-Ottoman-Mahdi role. Hard to see him backing down on any of this, and now he has the Jerusalem declaration as a Muslim call to arms. He already used it to organize a meeting. I see this all as an important trend.

Telephone conversation with King of Saudi Arabia Salman bin Abdulaziz Al Saud
Vladimir Putin had a telephone conversation with King of Saudi Arabia Salman bin Abdulaziz Al Saud at the Saudi initiative.

December 21, 2017 16:50
The detailed discussion focused on urgent issues of the Middle East agenda, including the developments in Yemen. The King of Saudi Arabia expressed concern over the launching of a ballistic missile in the direction of Riyadh by the commandos of the Yemeni Ansar Allah movement on December 19.

Having denounced this act, Vladimir Putin noted the importance of a thorough investigation of this incident and voiced his view that the Yemeni crisis must be settled exclusively by peaceful means, via national dialogue.

During an exchange of opinions on the situation in Syria, both leaders emphasised the need to step up efforts to reach political settlement.

They also discussed a number of issues of bilateral cooperation, including in the energy sphere, and agreed to continue close coordination with a view to maintaining stability in the global hydrocarbon market.

If Israel wanted to “get a foot in the door of the east (OBOR)”, all Israel has to do is
sign up with Gazprom and stop messing with Syria because Syria is a key transit route of OBOR.

There are two possible US scenarios for the ME.

One is to start a ‘Maidan’ in SA in order to burn it from the inside down and ultimately fracture it.
In this regard, a narrative is slowly constructed:
– that MBS is a traitor to the ‘muslim cause…’ e.g. selling out Jerusalem/Al Quds and the Palestinians,
– that SA are in bed with Israel (what they did before, but not anymore)
– that SA are US stooges (Trumps visit & dagger dance)
– that MBS isn’t sticking to the hardcore Wahabi ideology (because reforms he is introducing)

All this is to turn ISIS & clones against SA, start internal revolts, ‘Maidans’, overthrow MBS,
fracture the country (easier to control smaller statelets), put ISIS in charge of Riyadh,
steal Saudi $ reserves stored at the US FED (like they did with Lybia), steal Saudi gold reserves
(stored in various Swiss banks) – but the West will only be ‘safekeeping’ it until Riyadh is freed
from ISIS (e.g. never). Heck, they might even use ISIS control of Riyadh and the vast Saudi Army
equipment to attack Iran. And steal Saudi oil, or take it offline so worldwide oil prices will rise making
US fracking profitable.

I am appalled that the Treasury Department kept secrets from Congress and the American people and also supposed allies and the rest of the world.
Under what law was it empowered to do that?
Under no law, is strongly implied in the story linked above (https://www.bloomberg.com/news/features/2016-05-30/the-untold-story-behind-saudi-arabia-s-41-year-u-s-debt-secret).
WTF?
And, so it seems, at the heart of this particular lawless maneuver lay—who’da thunk it?—Israel! Negatives of our support for Israel and the need to hide things from international entities and the American public and Congress resulted in a gross distortion of our financial or is that fiscal policy (don’t know correct jargon here). Unbelievable!

When gold was seized from the American people in the Gold Act of 1934, the gold was used to fund the Exchange Stabilization Fund aka the ESF. The person put in charge of the ESF was also head of the OSS (forerunner of the CIA). The mission of the ESF was to protect the US Dollar, and US Business interests.

The ESF reports directly to the president, takes NO direction from anyone else (not congress -no one). The UST does show online some activity of the ESF, but you cannot determine if the is real or everything.

I encourage a little reading a research on the ESF you will discover it is indeed a cog of the deep state.

Thanks for the info.
Actually, I have read somewhere that massive amounts of gold were stolen from the japanese (who had themselves stolen it from the territories they conquered in WW2, and hidden it in various spots), and that this gold was used to fund various types of black ops.

If gold has no “intrinsic” value, a lot of people have acted as though it did.
So, I guess that gives it value.
Katherine

PS.
If the head of the EFS was the same guy who ran the OSS, then that was the same guy who was in charge of finding and making off with (and using) the Japanese gold. So, it fits. I mean, it is basically the same job.

I don’t know if you’re inclined to agree with Dr. Roberts’s analysis that the price of gold has been suppressed for years now through the use of the gold futures market. I do agree with him. If gold is indeed underpriced now, any nation with a brain is going to want to convert any yuan it receives under this yuan-exchange system into gold, and to wait for the huge price increase that’s been predicted for years but has not yet occurred. (Consider how France helped hasten the demise of Bretton Woods in the 1960s by demanding underpriced U.S. gold in exchange for its dollar holdings. And sure enough, when the U.S. went off the gold standard in 1971, France reaped a staggering windfall.)

So, you yourself have to believe either the price of gold is not being artificially depressed, or else, in effect, China is willing to be played for a fool. Seems to me there has to be something else at work here. Any thoughts from you on that?

Second, I could of course be wrong, but the Saudi IPO looks like a con game to me. It’s interesting that it’s only now, that KSA is (supposedly) running out of oil and is in deep financial difficulties from overspending, that they’re willing to let outsiders buy into the supposed future streams of Saudi oil wealth. My hunch is that anyone who buys into the IPO is going to end up taking a bath in red ink—as the Saudis smile a sly smile. (The Chinese might be willing to take the losses, though, for geostrategic reasons.)

Third, I don’t understand those who say “KSA will have all this yuan, with nothing to spend it on.” And then one person mentioned the demographics problem. Well, China could easily provide turnkey factories to KSA, which would provide plenty of jobs in KSA itself. (Of course, even this does not deal with the problem of robotics: globally, there’s a huge surplus of labor, and it’s only going to get worse thanks to robotics. In effect, factory jobs will be make-work, to keep young men occupied and off the streets. But even so, the pay would have to be low, or otherwise the corporations will use the robots, period.) I don’t see a solution to that problem—or at least not one that’s realistic. Do you?

Fourth, I’m surprised it hasn’t been brought front-and-center that the USA’s empire is built on the fact that, for America, money grows on trees, thanks to the dollar’s reserve currency role. So I don’t see how it’s possible to have any sort of dual or multiple reserve currencies. If the USA loses its monopoly, it’s all over for the American standard of living—which is to say, it’s all over for the U.S. polity: there will be blood in the streets. That’s why the powers-that-be here are resorting to desperate measures. The mainstream media might be portraying Trump as an idiot, but it seems to me he’s doing the Deep State’s bidding every step of the way (though leaving the trade agreements is an exception). We’re heading for a major catastrophic discontinuity, with Trump set up as the fall guy if the Deep State’s efforts fail.

Please reply. Your thoughts on these matters would be deeply appreciated, I’m sure, by all of us. Thank you, again.

in order for the us military to fight and win any sort of protracted non nuclear war against russia and or china it must ensure an unbroken supply chain FROM its asian suppliers for chips, circuits and various other components currently offshored and irreplaceable in the pentagons war machine. even more troubling for the pentagon is its utter dependence upon china for several handful in numbers of rare earth elements irreplaceable in modern warfare, especially the pentagons idea of modern warfare let alone apple!

there is simply NO way the us military can maintain an open and safe sea lane for those products in the pacific in the event they start WW3 and air transport will not work.

a major war is something i suspect the pentagon already knows it can not win at least until it re homes critical electronic components to usa shores and locates a dozen or more rare earth elements in sufficient quantities within north america.

for now and for some time to come all the pentagon can do is posture using the media as a bullhorn in an effort to puff up itself up. i doubt this fools anyone who needs to understand a strength and weakness table.

VERY recently trump initiated a complete exploration assessment within the united states looking specifically for minerals and it is not oil and gold he is looking for.

“a major war is something i suspect the pentagon already knows it can not win at least until it re homes critical electronic components to usa shores and locates a dozen or more rare earth elements in sufficient quantities within north america” The US will never win any war against a decent oponent. This became pretty obvious to everyone efter Vietnam. The US Deep State and everyone are aware ot that. Thats why the US wants to send “useful idiots” to fight its wars ie. former soviet states, NATO, whatever against Russia. Japan, India, Vietnam, whatever against China.

I want to thank all contributors for their consensus or varying or opposing views in response to Pepe’s article…..presumably some people at the real heart of things have done huge probability studies etc etc..worked those algorithms etc etc …great that this saker site is bringing together so many experienced and knowledgeable contributors…which at the least makes me aware of variables.Keep on posting guys.

david ronin asks a number of interesting questions especially about the price of gold and its value with the yuan in a global market place.the partial answer would be that the value of gold will increase dramatically.
after all, by which time the market has started,the price mechanism will be controlled by the russians and
chinese.
at present the western banks are fearful that if gold or crypto currencies are allowed to be controlled by the market, speculators will drain their bank accounts and rush headlong into gold and cryptos.whether or not the
western banks and their governments will allow this is another interesting question.a good article by pepe escobar.

Please put people out of their misery and comment on the fact Comey did not try to prevent Trump but rather two weeks out from election day intervened in the electoral process to in fact cruel Clinton’s chances.

I am pointing out the fact that there is a multi level con going down wherein people think Trump is up against the fbi and deep state but a closer inspection will show that deep state chose him and the fbi russiagate stuff is cover for the real preagreed actions the US is undertaking.

Exactly. It is a scam to reinforce both the anti-Russia propaganda meme and present trump as the beleaguered outsider rebel, very much in need of support, no matter what the treasonous quisling attempts to corrupt and trash in the service of his zionazi masters.

I can sort of follow this, except:
Who is giving Trump support?
Maybe a few people like us, extremely qualified “support.”
And his original base of support, but how much do they count?
Are you saying that the game as planned is not working?

It’s more a matter of who does trump work for, thereby support. Look at the critters he has filled his regime with. All zionazis, neocons, etc., the same, or even worse far right swamp he fraudulently campaigned on getting rid of. The zionazi trump campaign was a mirror image of the zionazi obama campaign. Instead of pretending to be an “left outsider”, opposed to the far right, like obama, trump pretended to be a “right outsider” opposed to whatever he thought the audience he spoke to wanted to hear.

This is politics sold to you like fords, l’oreal and willie enlargement scams.

Thank you. Agreed. A brilliant piece that amplifies the voice of the empire’s victims of the centuries into a triumphant recognition that the empire is dying and can no longer subjugate anyone who simply and strongly asserts the refusal to be cowed.

The Russians and the Chinese are in bed with the Americans and the anglozionists.

China and Russia are not the good guys either. China and Russia are only playing good cop, bad cop with their partners, the Americans and the Europeans.

China, like Russia, is not pro-gold in reality and acts in collusion with the BIS, IMF, COMEX, and LBMA to suppress the price of gold. When gold goes up in price, it will be against the will of the Chinese, the Russians and the Indians.

The BRICs are all IMF member countries and are thus forbidden to monetize gold, or link their currencies to gold, or use gold as a trading or exchange mechanism:

India recently collaborated with Western bankers and following the West’s instructions, temporarily destroyed the purchasing power of its own Indian population by demonetizing physical cash, under the guise of eliminating tax evasion and cash-only criminal activity. This has had the effect of crashing the gold price by temporarily removing the Indians from the gold market, exactly when the Trump inauguration lit a fire under the gold price.

The Russians never abstained from using dollars even at the time of the communist USSR! If they did not demand gold for their oil during the Cold War, why would the Russians do it now when the Russian central bank is owned and controlled by the City of London banking establishment since the creation of the new Russian Constitution under Yeltsin? The Russians are forbidden to issue their own currency the Ruble without permission from Western bankers and the Russians can only buy US Treasuries with the dollars they get for their oil, not gold. There are more dollar assets than Rubles in Russia:

The gold price would have skyrocketed if the Russians and the Chinese were buying gold hand over fist as alleged. Why do you think that Western bankers would give gold away at or below cost to their purported enemies?

Unless they were not enemies in reality, and just partners playing good cop, bad cop for the purposes of fooling and manipulating their unsuspecting respective populations?

Why do the Russians never ask the Americans to leave Syria where the Americans are illegal invaders under international law? Why did the Russians never prevent the Israelis from attacking their allies the Syrians?

The Shanghai Gold Exchange is a fraud designed to legitimize the fraudulent COMEX “discovered” gold price. Goldman Sachs and JPM never could have manipulated the gold and silver prices lower without active Chinese collaboration. That the Shanghai Gold Exchange is a physical only market is a LIE:

The Chinese government defrauded and stole from their own Chinese citizens by encouraging them to buy gold at the top. The Chinese bankers then colluded with JPM and Goldman Sachs to crash the gold and silver prices. Large amounts of physical silver were leased out and sold into the physical markets by the Chinese authorities as well:

Are you joking?
A really neutral price for gold would start tenfold these numbers.
And a bull market 50fold.

Watch the 5y chart for gold any everybody sees you are talking nonsense.

As for Russia and China: Ok, they had some genuine interest in keeping the prices artificially low, because they wanted to get as much gold for their US bonds as possible before going real.
However, I doubt that they ever genuinely will do this.
I hope it, but only believe it if I see it.

The neutral price of gold is where it closes at the end of the day.
ie supply = demand

Go and look at where gold is currently trading in relationship to the 50 & 200 week moving averages over the last 5 years. That is a bull market from the 1045 low in 2015. The definition of a bull market is an uptrend trading above moving averages.

The correction that lasted a couple months bottomed out in early December at the 200 week moving average at 1238 and rallied off it. Very bullish for gold. I expect a large elliot wave 3 has started.

If gold gets to 1400 then it confirms my hypothesis the a huge inverted head & shoulders reversal pattern that started in 2014 has completed and a huge elliot wave 3 is underway. The last time this happened to gold was in 2003.

“A really neutral price for gold would start tenfold these numbers.
And a bull market 50fold.”

Mod Note (personal attack deleted), the financial markets are chaotic systems and trend following is how you predict the behavior of chaotic systems(in the medium term.

My message is I wouldn’t trust the accuracy of your conceptual map of reality as far as I could ship on it.

Mod Note This thread is degrading to off topic and personal. Perhaps it is time to take this to the Movable Feast Cafe keeping in mind that personal attacks rather than attacks of the topic (issue) will be banned.

Yes, it is as if somebody had predicted, that Bitcoin should be valued more than 10 USD only some years ago.
But as you appear to be a big believer and supporter of Wallstreet and its worthless Zio fiat paper fraud, enough said.

Thanks to the Mod. for stopping the personal attacks.
Well – in case of lacking arguments some tend to go personal.

Yours is an interesting theme that goes around in certain circles (that there is one cozy bed for all the elite). Though I think any well argued idea deserves a look, my sense is that the situation is far more nuanced.

First of all, psychopaths do not make a habit of getting along and falling in line without “one ring to rule them all and in the darkness bind them”. This simply means that they only obey absolute power. So if you want to promote the “one cozy bed” theory, you need to also describe this absolute power hierarchy that organizes and governs them.

It does appear that there is some degree of organized hierarchy in the west with the CFR and various other organizations. But even the west is now experiencing an internal war. Bad guys are very bad at getting along and power grabs within and among mafias are typical.

Russia seems still somewhat in the grip of the west, but less and less so as time goes by. China no doubt has made all sorts of deals to get where they are now, but do you really believe they will ultimately submit to western rule?

The veil of illusion in the west is thick as mud with every form of obfuscation used against the populace. However, the existence of competing nations creates a huge problem for the Deep State (or whatever you want to call them). They are managing so far by using near complete media capture in the west (USA in particular), but this strategy is limited with the Internet crossing international boundaries.

Fortunately or unfortunately, there does not seem to be a cozy bed for the elites. No, it is war on several levels. The question is how severe and widespread does the war become.

Looks like it’s “full moon” time again in Erdoganistan … what with issuing the latest post-S400 deal tirade on “Assad Must Go!” themes (he must be short of some KSA cash-for-words published) he must be confident testing the curse.

And just to be sure (to be sure) the Arab peninsula pinheads are clear that they would prefer to be led by Tel Aviv than an old Ottoman regional despotic.

Venezuelan President Maduro shocked the market in early December when he followed China’s ‘petro-yuan’ futures announcement by making headlines of himself proclaiming a new national cryptocurrency – the ‘Petro’ – to overcome The West’s “financial blockade.”

Today he followed up by confirming “every single Petro will be backed by a barrel of oil… and gold.”

I’m growing impatient and frustrated with Trump and his claims as a master negotiator in chief and linking North Korea to China Trade. China was just caught selling oil to North Korea reneging on their promises to the US. China is using North Korea to play Trump for a fool. No, I don’t think the democrats could do better. Look what they did in Libya. Look what Bush did in Iraq and Afghanistan. Put a 10% tariff on all imports and 1% consumption tax to lower payroll taxes. Lesson to Trump, when you have a backstabbing lying ally like China then you don’t place the dependence of the US, Japan and South Korea on the Chinese. It makes Trump look like China’s b*tch.

In 2021 there will be nothing real backing the claim that USA still has Global Hegemony. Even now that control is wildly exaggerated. China passed US as biggest economy in 2014. Now the gap is 21% and growing 3-4% every year. In real economy China is twice bigger producer and 60% bigger than whole EU.

China is bigger now than US, don’t make any mistakes. US Global Hegemony is over. Washington can’t handle China an Russia as it did with Saddam and Gaddafi.

I don’t think they will wait for facts to be established on the ground to mark the “beginning of the end of the petrodollar”. By then it will be too late. There will likely be war in 2018. But it won’t be in Korea – too much at stake and especially too many South Korean and Japanese casualties. Besides as Truman did, the US will first need to secure Taiwan in order to secure the US-South Korea-Japanese southern flanks before pressuring the DPRK. If the US attack the DPRK first in any way, China will seize Taiwan to threaten the US and allies southern flanks. With their south flanks thus exposed, there is no way they can win against the DPRK, especially faced with a possible Chinese attack either or likely simultaneously down the Korean peninsula and from Taiwan.

Therefore the US will first provoke China in Taiwan, hoping to destroy the bulk of the Chinese conventional forces – naval and air – before launching a saturation bombing attack on the DPRK and North Eastern China bordering the DPRK. As a diversionary measure, willing cannon-fodder India, with the help of Australia, will attack in the Himalayas and blockade the Straits of Malacca to sever China’s supply lines and threaten an unwinnable two-front war for China. The US will increase pressure on Russia in Europe to prevent Russia from coming to China’s help in the month or two that they estimate will be needed to crush China.

But will China let the US have the initiative? I doubt it. Therefore, China is likely to seize Taiwan first even as the US warships enter Taiwan’s territorial waters on their way to dock at Kaohsiung. The US’ retaliation will see China seizing the Ryukyu (Okinawa) as well. After all the US has no right to unilaterally give away the Ryukyu back to Japanese rule under the Potsdam agreement during WW2.

With both Taiwan and the Ryukyu in Chinese hands, the US will not risk a conventional attack on the DPRK. If the US escalate to nuclear, Japan will be vapourised and so will a large part of the US. India will also be nuked. China will lose about 200 million people but will recover fast, likely within a generation. The US will not recover as fast and will remain a shadow of itself for generations. India will be balkanised.

NSS counterpunch? Already started. The US economy, already on the ropes cannot hope to survive a gold backed Petro-Yuan backed by Russia, Iran and Venezuela, even without the Saudis. Reason: Crude oil is not now a critical commodity with the clean energy revolution, shale production and Russian and Iranian supplies. Also the rapid switch to electric battery cars driven by China. And with the BRI opening up and upgrading the economies of Eurasia, Central Asia and Maritime Asia (to repeat the glory days before the arrival of the Western hyenas 500 years ago) and extending to Africa (already rapidly growing as a result of China’s nurturing) and South America, China can dispense with the US market and soon to be next to worthless US Dollar. Canada is also looking to hook up with China. India is quiet at the moment but should avoid war with China. Only Australia, with a FTA signed and sealed with China is pushing the envelope on behalf of big brother US.

The US move to war is likely to start with sanctions imposed on China using the section 301 of the Trade Act 1974. When that fails and back-fire as China counter-sanctions the US, then the US will likely resort to provocation in Taiwan and an attack on the DPRK framed as an attack by the DPRK.

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